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Housing: 2007 Thread.

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Trianon

Golden Member
Jun 13, 2000
1,789
0
71
www.conkurent.com
Even NAR can't deny reality anymore...
Text

Nov. housing index falls 2.6 percent

By ALAN ZIBEL, AP Business Writer 59 minutes ago

Pending U.S. home sales dipped in November, a trade group for real estate agents said Tuesday, but it expects the sales pace to pick up significantly in the second half of 2008.

In another indication that the housing market's struggles aren't finished, the National Association of Realtors said its seasonally adjusted index of pending sales for existing homes fell 2.6 percent to a reading of 87.6 from an upwardly revised October index of 89.9.

Analysts warned of continued calamity in the ailing U.S. housing market.

"The best thing you can say about pending home sales is that they aren't getting much worse," Mike Larson, a real estate analyst at Weiss Research in Jupiter, Fla., said in a statement. But with the labor market weakening, "you have the recipe for ongoing trouble in housing," Larson said.
BTW, time for new thread?
 
Oct 30, 2004
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I still think that housing prices have outpaced the middle class's ability to afford them. I sure do hope that they drop.
 

senseamp

Lifer
Feb 5, 2006
34,993
5,039
126
Housing has only down to go, and people underestimating the decline will be thoroughly burned. There is going to be great price to pay for excess of the last 6 years.
And not just housing but all assets propped up by cheap borrowing, be it commercial real estate, private equity, etc.
Short term I am out of SRS (ultrashort real estate), having ridden it from 80 to 130, but if it drops under 120, I will start rebuilding my position. Fortunately there is still a lot of denial out there to make for another run. People still think the Fed will save housing. WRONG. Fed will save (most of) the banks, maybe. He won't save the housing market from the laws of gravity.
 

Trianon

Golden Member
Jun 13, 2000
1,789
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71
www.conkurent.com
Hopefully this will somewhat slow down drop in housing prices, no?

Home construction plunged last year

By MARTIN CRUTSINGER, AP Economics Writer 54 minutes ago

The prolonged slump in housing pushed construction of new homes in 2007 down by the largest amount in 27 years with the expectation that the downturn has further to go.

The Commerce Department reported Thursday that construction was started on 1.353 million new homes and apartments last year, down 24.8 percent from 2006. It was the second biggest annual decline on record, exceeded only by a 26 percent plunge in 1980, a period when the Federal Reserve was pushing interest rates to post-World War II records in an effort to combat an entrenched inflation problem.

Many economists believe that the current slump in housing will rival the dive in the late 1970s and early 1980s when housing construction fell for four straight years before beginning to recover after the severe 1981-82 recession. For December, construction fell by a bigger-than-expected 14.2 percent.

In other economic news, the Labor Department said the number of newly laid off workers filing applications for unemployment benefits dropped by 21,000 last week to 301,000. That marked the third consecutive weekly decline and occurred even though the government reported that the unemployment rate increased sharply in December.

Some economists believe the current housing troubles will push the country into another recession as consumers are staggered by the steep drop in housing ? which has pushed home values down in many parts of the country. Consumers also have been faced with rising mortgage defaults and a severe credit crunch which has made loans harder to obtain.

Various recent reports have increased those worries including news that unemployment in December shot up to 5 percent, rising by the largest amount in one months since the country was reeling from the 2001 terrorist attacks. Many large financial institutions have announced billions of dollars of losses due to the meltdown in subprime mortgages.

The drop in construction in December was bigger than economists had been expecting and reflected weakness in all parts of the country. Housing construction fell by 30.8 percent in the Midwest and was down 25.8 percent in the Northeast and 19.6 percent in the West. The decline in the South was a smaller 3.3 percent.

Economists said the weakness showed that the housing correction was getting worse since the turmoil in financial markets hit in August.

"Builders have finally thrown in the towel," said Ian Shepherdson, chief U.S. economist at High Frequency Economics. "This is a precondition for recovery as it will eventually reduce the inventory overhang. But there is a long way to go."

For December, housing starts totaled 1.006 million units at an annual rate. In an ominous sign for the future, applications for building permits fell by 8.1 percent to an annual rate of 1.068 million units. That marked the seventh consecutive monthly decline and reflected the fact that builders have been slashing production plans in an effort to deal with a glut of unsold homes.

A survey of builder sentiment prepared by the National Association of Home Builders came in at the second-lowest level on record in January at a reading of 19. That was up slightly from the record low of 18 set in December. The index has been below 20 since October as builders struggle to deal with slumping demand, rising housing defaults and tighter lending standards.

Last week, KB Home, one of the nation's largest homebuilders, said losses in the fourth quarter had ballooned to more than $770 million.

Many economists believe the housing sector will remain weak through this year before starting to stage a rebound in 2009.
Text
 

Vic

Elite Member
Jun 12, 2001
48,368
9,150
126
Breaking news: Lehman just announced it is closing Aurora's lending operations. Sorry, no link yet. Alt just went bye-bye.
 

Slew Foot

Lifer
Sep 22, 2005
12,381
94
86
Originally posted by: Vic
Breaking news: Lehman just announced it is closing Aurora's lending operations. Sorry, no link yet. Alt just went bye-bye.
Interesting, please explain.

 

abaez

Diamond Member
Jan 28, 2000
7,158
1
81
So I have a question - I'm currently renting a place in downtown los angeles and wanting to buy a condo.

Prices have gone down the past few months, not much (~40kish), but lots I know lots of perks have been added (one place gives you a mini if you buy). There are quite a few developments that are going to be finished this year and will add quite a bit of supply to the downtown l.a. area.

I'm wondering - would the market keep falling insomuch that it's better off waiting until early next year? I was thinking of buying something later on this year, possibly a one bedroom mid-300's (that are currently priced at low 400's). What do you guys think?

I'm worried that a downtown area would not really be affected as much as a regular suburb would to the market, especially since downtown l.a. is becoming a very attractive place to live since I started renting 1.5 years ago (new ralphs.. l.a. live.. grand avenue project etc.)
 

rchiu

Diamond Member
Jun 8, 2002
3,846
0
0
Originally posted by: Vic
Breaking news: Lehman just announced it is closing Aurora's lending operations. Sorry, no link yet. Alt just went bye-bye.
Really, I read they were closing 3 subsidiaries, not the entire Aurora lending operation. Link
 

Slew Foot

Lifer
Sep 22, 2005
12,381
94
86
Originally posted by: abaez
So I have a question - I'm currently renting a place in downtown los angeles and wanting to buy a condo.

Prices have gone down the past few months, not much (~40kish), but lots I know lots of perks have been added (one place gives you a mini if you buy). There are quite a few developments that are going to be finished this year and will add quite a bit of supply to the downtown l.a. area.

I'm wondering - would the market keep falling insomuch that it's better off waiting until early next year? I was thinking of buying something later on this year, possibly a one bedroom mid-300's (that are currently priced at low 400's). What do you guys think?

I'm worried that a downtown area would not really be affected as much as a regular suburb would to the market, especially since downtown l.a. is becoming a very attractive place to live since I started renting 1.5 years ago (new ralphs.. l.a. live.. grand avenue project etc.)

Supply>>>>demand = price drop

40K in a few month on a 400K property is 10%. Thats quite a bit. THink of it this way, do you want to be paying off that Mini for 30 years? Wait for them to drop 30K off the price and ditch the car.



 

Vic

Elite Member
Jun 12, 2001
48,368
9,150
126
Originally posted by: rchiu
Originally posted by: Vic
Breaking news: Lehman just announced it is closing Aurora's lending operations. Sorry, no link yet. Alt just went bye-bye.
Really, I read they were closing 3 subsidiaries, not the entire Aurora lending operation. Link
Aurora is ceasing all wholesale and correspondent originations. No more submissions are being taken. All loans currently in process must close and fund by Feb 17.
They will continue servicing.
 
Oct 30, 2004
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I've been wondering whether it might make sense to get a condo or a small house, too. I've seen 1000 ft condos for $50,000 in my area. Perhaps it would make more sense after the Fed cuts the interest rate. For those of you who are in condos, how stiff are monthly condo fees?
 

IronWing

No Lifer
Jul 20, 2001
62,113
15,359
136
The way things are going, I'm going to get to pay off the rest of my mortgage with funny money. :)

Of course, my employer will be paying me in funny money. :(

Rates are approaching the point where we should see another massive round of refinancing in the prime market among folks with plenty of equity. I've got eleven years to go so I'm hoping to find a decent 10 year mortgage to jump to in this round of rate cuts.
 

RightIsWrong

Diamond Member
Apr 29, 2005
5,649
0
0
I just took the plunge. Here in Austin, prices have leveled out and are running flat. Some areas (not really the places that I would want to have lived) have dropped some. We were able to close on a house in a master planned golf community on Tuesday and have moved in already.

We got ~3200 sq. ft. new build for $215,990 and are loving the extra space we had from where we were renting.
 

Trianon

Golden Member
Jun 13, 2000
1,789
0
71
www.conkurent.com
Originally posted by: RightIsWrong
I just took the plunge. Here in Austin, prices have leveled out and are running flat. Some areas (not really the places that I would want to have lived) have dropped some. We were able to close on a house in a master planned golf community on Tuesday and have moved in already.

We got ~3200 sq. ft. new build for $215,990 and are loving the extra space we had from where we were renting.
Daymn, nice price! Here in Chicago Metro you cant' get 1300sg ft place for that much, city prices are even higher
 

TheSlamma

Diamond Member
Sep 6, 2005
7,625
4
81
Originally posted by: RightIsWrong
We got ~3200 sq. ft. new build for $215,990 and are loving the extra space we had from where we were renting.
Wow, I figured big places like that were only reserved for huge SUV driving republicans :) :p

 

Vic

Elite Member
Jun 12, 2001
48,368
9,150
126
Originally posted by: WhipperSnapper

I've been wondering whether it might make sense to get a condo or a small house, too. I've seen 1000 ft condos for $50,000 in my area. Perhaps it would make more sense after the Fed cuts the interest rate. For those of you who are in condos, how stiff are monthly condo fees?
Condo fees totally vary on the HOA.

Mortgage rates will probably go UP slightly after the Fed cuts the Funds rate again.

Prices have moderated but not yet gone down in my area. Last report showed up 1.1% year-over-year in December. Yes, LK, I know that's less than inflation.
 

GrGr

Diamond Member
Sep 25, 2003
3,204
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A tipping point? "Foreclose me ... I'll save money"


LA Times

A homeowner who can't sell his house tells the L.A.Times, "Foreclose me. ... I'll live in the house for free for 12 months, and I'll save my money and I'll move on."

Banks and lenders fear this kind of thinking -- that walking away from a house could be the smart economic move -- appears to be on the rise.
Wachovia, in a conference call yesterday, warned investors that increasing numbers of homeowners are walking away from their homes by choice: "... people that have otherwise had the capacity to pay, but have basically just decided not to because they feel like they've lost equity, value in their properties..."

Calculated Risk notes this is "one of the greatest fears for lenders ... that it will become socially acceptable for upside down middle class Americans to walk away from their homes."

A commenter on L.A. Land this morning writes, "I am one of these people. My condo has dropped in value from $520K in 5/06 when I bought it to $350K now. My ARM payment will probably go up $900 per month in June.

"Despite all this, I would be willing to stay if the bank would refi the loans to a 30 year fixed, but since I'm not a 'hardship' case they'd apparently rather foreclose. I guess the only way I could qualify for loan mitigation is to get my boss to fire me, stop making payments, and wreck my credit. In fact, my bank won't even talk to me until I miss a couple of payments.

"I have purchased a cheaper place in a nearby area now, while my credit is good, and will stop making payments on house #1 after house #2 closes. I know the foreclosure will be on my credit for 7 years, but I will have saved a lot of money.

"I realize I agreed to the deal when I signed the mortgage papers, but I am within my rights to walk away from a bad deal and suffer the consequences, just as many corporations write down billions of dollars of debt, lose money for their shareholders, and lay off people as a result of their bad decisions.

"I don't really understand why people view a business decision by a homeowner as a terrible moral lapse. However, when large lending institutions, with access to more sophisticated information than any consumer could imagine, make mistakes affecting thousands of people worldwide, they are not excoriated and vilified with the same righteous zeal."
Soo, is it:

The little 'deadbeats' are beginning to play the game big boy style and refuse to play the sucker part in the Ponzi games.

or:

Goddamn those deadbeats who cannot take personal responsibility for their actions.

 

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